Leveling the Playing Field: Industrial Policy and Export-Contingent Subsidies in India-Export Measures

28 Pages Posted: 22 Feb 2021 Last revised: 29 Mar 2021

See all articles by Swati Dhingra

Swati Dhingra

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Timothy Meyer

Vanderbilt University Law School

Date Written: February 12, 2021

Abstract

In India-Export Measures, the United States challenged a range of Indian measures as prohibited export- contingent subsidies, and a WTO panel largely agreed. This article examines the factors at play in the United States’ decision to bring the challenge. At the level of policy, the United States case reflects India’s graduation from the protections afforded developing nations’ export-contingent subsidies under the Agreement on Subsidies and Countervailing Measures. A closer examination, however, shows that India ramped up its export-contingent subsidies just as the SCM Agreement required it to wind those subsidies down. Moreover, the expanded Indian subsidies led to increased import competition with the politically influential metals and pharmaceutical sectors in the United States, which pushed the U.S. challenge. We reflect on the larger implications of the challenge for the future of trade rules on industrial policy. In particular, we note that the United States pursued a trade enforcement policy that would have the effect of increasing pharmaceutical prices in the United States, by reducing subsidies for imported generic drugs, at a time at which the Trump administration allegedly was trying to reduce the price of prescription drugs. This disconnect suggests the need for both greater transparency in trade policy and greater governmental coordination on the connection between trade policy and other policy priorities.

Keywords: industrial policy, WTO, India, export subsidies, policy coherence

JEL Classification: F13, K33

Suggested Citation

Dhingra, Swati and Meyer, Timothy, Leveling the Playing Field: Industrial Policy and Export-Contingent Subsidies in India-Export Measures (February 12, 2021). Robert Schuman Centre for Advanced Studies Research Paper No. RSC 2021/15, Vanderbilt Law Research Paper No. 21-17, Available at SSRN: https://ssrn.com/abstract=3789245 or http://dx.doi.org/10.2139/ssrn.3789245

Swati Dhingra

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Timothy Meyer (Contact Author)

Vanderbilt University Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States
615-936-8394 (Phone)

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